It’s safe to say that 2020 has been one of the strangest years of our lifetimes—most likely THE strangest we’ll ever experience. We’ve had to adjust to new ways of working remotely, and so have most of our real estate clients. Thankfully, we were well prepared. We’ve always embraced technology and knew that this was the future of our business. We just never expected it to escalate this quickly into a whole new way of conducting home sales. So, what does this all mean for 2021 real estate?
Focused on the Positive
2020 wasn’t all bad, though. In fact, the real estate market has been red hot since things started opening up back in June. Our normal busy spring market was delayed, so buyer demand percolated during that downtime. Meanwhile, interest rates have been at historic lows and home prices have steadily risen in almost every market across the country. It has been an extreme seller’s market with almost every home selling rather quickly (often with multiple offers above asking). At the same time, buyers are still benefitting from the cost of money being relatively cheap. In other words, they can afford more with mortgage rates being so low.
It’s been the perfect storm for a flurry of real estate activity throughout the summer and fall. We may slow down a bit now with winter weather, the holidays and the potential for more COVID-19 shut downs until the vaccine is ready to distribute widely.
What to Expect in 2021
This leads us to 2021 real estate, which we expect to continue the hot seller’s market trend well into the spring and possibly summer markets. However, we don’t believe the current hectic pace can continue too much longer. Eventually, the rates will start to move upward. Home price growth may flatten out. Seller inventory may slowly level out with buyer demand to get back to somewhat normal real estate market conditions as the world slowly starts to return to some sense of normalcy as the vaccines are more available.
The New Normal
Even though some things may go back to the way they were before, we expect there to be a “new normal” for many aspects of business, society, education and other issues we all might have taken for granted prior to this pandemic. COVID-19 has accelerated many future trends into the current lifestyle. Many workers may never go back to full-time work in an office setting. The same might be said for children and young adults in school. Remote working, commerce and education will likely be forever changed by the events of 2020. We can see more “hybrid” office and school environments where many parts of it are done remotely and in-person attendance may be less required. E-commerce was already trending upward in the past couple decades. Now it completely dominates the retail space.
Only time will tell as to how our lives will be changed by the pandemic. This way of thinking is already having its effect on the real estate market and will continue to shape our industry. Homeowners are reprioritizing their housing needs in terms of where they live and how they live. Those who have the ability to work from home no longer need to be concerned about their proximity to the office. They can move further away to a more affordable location, or to an area that offers a climate or lifestyle they prefer more than where they live now.
Which school district you live in may be less important if much of the learning will be done online. Shopping can almost completely be done online, as well. Those working from home will value home office space, home gyms and other features more than ever. We’re also seeing a trend of multi-generational homes with college students and grandparents moving in.
It’s a Seller’s Market, But for How Long?
Sellers have seen these opportunities. They are seeking new housing situations themselves while knowing that their current properties offer features and space that other buyers may be looking for.
Though we can never really predict the future, we have some thoughts on what the 2021 real estate market might look like. The seller’s market trend should continue for a little while longer. By the end of the year—maybe even as soon as summer—things will start to level out again if housing inventory and mortgage rates start to increase. Remember, we still have a lot of homeowners in mortgage forbearance plans right now, so those missed payments will catch up to many people and they may be forced to sell. Some may opt to sell while still in forbearance to avoid a sketchy financial situation ahead.
There are so many unique factors in play right now. Yet, we all know the real estate market (and our economy as a whole) is cyclical and has a tendency to self-correct. What’s interesting is how our changing lifestyles and housing priorities will shape the future of real estate—especially here in our suburban communities throughout Southeastern Pennsylvania and Northern Delaware.
If you are considering selling your home or buying a new home, contact us today. We’ll be happy to answer any questions you have and offer our professional advice to help you make the best decisions for your family’s future.
For a full review of 2020 and the interesting real estate trends we’ve seen this year, be sure to sign up for The Cyr Team Newsletter.